As an agency owner or business owner in general, customer acquisition has been hard. This is one of the things that I have struggled with over and over. Over the years, I have attended networking events, mixers, joined the Chamber of Commerce and developed strategic partnerships.
I started to look at why we are all fascinated with customer acquisition. I mean we all spend tons of money on direct mail, SEO, PPC, social media advertising, and trade show. But is that the real problem?
As I started to ask our clients why is customer acquisition so important, 82% of them said in order to keep the lights on, they needed more sales. They needed to increase their customer base. No real surprise. The next response caught me off guard. We lose a client after 13 months (average) and we must replace the revenue.
Bingo! We now have something to chat about. Customer retention is the real problem. If we are always looking for new business, this gives us less time to manage and nurture our current relationships.
As I was doing some research, I found that only 18% of marketing agencies have a greater focus on customer retention, than they do on customer acquisition. The way we look at the “growth” problem, is wrong. We need to focus on keeping the right customers and dumping the rest.
Now, I am not saying you completely stop looking for new business. That would be suicide for your company, but maybe take a look at your customer retention strategy and ensure it is on par with your customer acquisition strategy.
5 Reasons Customer Retention for Your Marketing Agency Is Important
I am going to challenge you with something. Ask yourself, “Do I know the lifetime value of my customers?” I bet the majority of you are going to say “no”. The majority of companies and agencies are looking at new sales, a very important key performance indicator, however, we need to also be looking at customer lifetime value (CLV).
Here are 5 reasons to build your business on customer retention for your marketing agency.
Build On Growth
Do you ever feel like your business cannot grow? Do you feel like it is one step forward, one step back? The problem is simple. If you are losing a customer every time you get a customer, the only way to grow is to get 2 times more customers than you lose or increase your price tag.
However, if you are able to take 2 steps forward and 1 step back, your monthly revenue will double every month. If you can take 3 steps forward, and one step back, your monthly revenue will triple.
I get it. Most of us out there are playing in the project world. A new logo is a one time deal. It is now time to get creative, that’s what we do anyway and sell some creative retainers. Give you client a monthly block of time for other creative work. This way you can help keep them stay on their brand guidelines. We do not want to see the client’s new logo on a Publisher created a flyer, right?
Build On Scale
Okay, now we are growing. We have a couple retainers in place that help us take more steps forward then backward. We are moving forward. It is now time to scale. Yes, scalability can be difficult when your income is an unknown. Should I hire? Should I get a larger office? Should I move my office out of my garage? These are scary questions and questions that we all struggle with as we grow.
However, you now have a predicted revenue model. You know that you are going to bring in enough revenue to pay rent, pay yourself, and maybe hire that junior designer. Retaining your customer base will help you grow and be comfortable growing.
Customer retention will give you the ability to scale your business and reinvest in growth. Just think of how many cool projects you can do with more help, more resources, and all your monthly bills paid.
Build Your Brand
Does your business or marketing agency have a brand advocate? Someone that will share your social media post, your blog posts, or brand message. The more customers you retain and help grow, the more people that will go to bat for you when it matters and spread your word.
Your agency is blogging for business. You also have an email list with your current customers. You send an email to your current customers with a new blog post. They read it and share it on social media. These social signals land on a potential new lead. They then call you for your services.
Your brand should be about why you are helping your customer base. If you are truly helping and doing great work, then your current customer, retained customers, will help you do the recruiting. Build your brand through brand loyalty.
Build On Customer Referral
Okay, let’s go one step beyond sharing your next blog post on social media. Do your customers refer business to you? When you turn your main priority from customer acquisition to customer retention, your customer base will become your sales team.
Thinks of it like this. You are an inbound marketing agency and help your customer increase web traffic by 71%. Are they going to fire you? Well, maybe, if they are not the right customer. Most likely, if they are a normal human being, they will refer you to their other business contacts. “Hey Joe, my marketing agency is helping me grow like a weed. You need to give them a call.”
By retaining your customers, you are going to be creating that sales team you always wanted. The sales team that is bringing higher qualified leads to the table. Your customer retention strategy will drive more business in the long run.
Build A Better Cost Structure
Your cost structure refers to the types and relative proportions of fixed and variable costs that a business incurs. These costs include marketing, sales, and other overhead costs. By changing your strategy from a customer acquisition to customer retention you will drastically change your cost structure.
The statistic is simple. It cost 5 times more to obtain a new customer than to retain a current customer. An emphasis on customer retention will help you lower your cost and increase your margin. This will not only make your customers happy but also make your accountant happy.
Customer retention for your marketing agency is very important to the growth of your business. Customer retention will build your business through referrals, lower cost, higher margin, and building your brand.
We would love to hear your story. How has customer retention helped grow your business? How has it changed the way you do business? What tips do you have on retaining customers?
Importance Of Customer Retention Stats
- 28% of consumers are loyal to their providers and brands (Accenture)
- 45% of consumers maintained a consistent level of loyalty to the top 100 CPG brands in the U.S. from 2014-15 (Catalina)
- 73% of consumers cite price and value as the leading factor that determined brand loyalty (Support.com)
- 66% of consumers cite features, design and quality of product or service as the leading factor that determined brand loyalty (Support.com)
- While 89% of consumers agree that good service makes them feel more positive about the brands they engage with, 48% also said they are suspicious about how their data is used (Verint)
- Top 3 reasons consumers switch brands: cheaper pricing (31%), rude staff (18%) and too many mistakes (16%) (Verint)
- 61% of consumers would tell friends and family about their experiences, while 27% reported that they would sign up to the company’s loyalty scheme (Verint)
- Only 15% of consumers don’t think good service would change their behavior in any way (Verint)
- 38% of marketers say their biggest 2015 challenge is improving customer acquisition and retention (TeraData)
- 29% of B2B customers are fully engaged (Gallup)
- Top companies that have earned consumer loyalty are: USAA, H-E-B, Publix, Trader Joe’s, Apple, JetBlue Airlines, Aldi, Hy-Vee, Amazon.com, Chick-fil-A, Victoria Secret, ACE Rent A Car, A credit union, Kroger, QVC, Popeye’s, Whole Foods, Panera Bread, Lexus, Papa John’s, Costco & Wegmans (Temkin Group)
- Top brands that best meet Millennial consumers’ expectations and, therefore, to which Millennials are most engaged and loyal, are: Apple, Nike, Chipotle, Target, Amazon, Samsung, Sephora, Levi’s, PayPal, Old Navy, Under Armour, Beats, Google, Asus, Chevrolet, Converse, Verizon, Victoria’s Secret, Ford and Ralph Lauren (Brand Keys)
- 62% of millennials feel that online content drives their loyalty to a brand (NewsCred)
- The most important driver of brand loyalty for millennials is a great product at 77%, followed closely by brand recognition and trust at 69% (NewsCred)
- 31% of consumers are willing to recommend providers and brands to others (Accenture)
- The potential revenue up for grabs due to changes in consumer spending and switching among brands and providers is $1.6 trillion, a 29% increase from 2010 (Accenture)
- 56% of U.S. consumers said the number of brands they consider for a given product or service has increased significantly over the past 10 years (Accenture)
- 46% of U.S. consumers said they’re more likely to switch providers than they were 10 years ago (Accenture)
- % of unfavorable customer opinions on social media by industry: Telecom (96%), Consumer Electronics (94%), Retail (93%), Airlines (88%), Hotel Chains (72%) (Cap Gemini)
- Top 3 customer frustrations: failure to quickly resolve an issue, lengthy hold times, and interacting with representatives who cannot provide a solution (Accenture)
- Avis had the highest level of consumer engagement for the Car Rental category (Brand Keys)
- “Fully engaged” customers (those with a strong attachment to the brand, or brand ambassadors) deliver a 23% premium over the average customer in share of wallet, profitability and revenue (Cap Gemini)
- “Actively disengaged” customers (those who have negative feelings towards the brand, or spread negative word-of-mouth) represent a 13% discount in share of wallet, profitability and revenue (Cap Gemini)
- 44% of millennials say they are loyal to brands they buy, and 52% will choose quality over price (IRI)
- 76% of American shoppers view customer service as a “true test” of how much a brand values them (Aspect Software)
- 82% of U.S. corporate executives said that customers’ expectations of their company were “somewhat” (47%) or “much” (35%) higher than they were three years ago (Lithium)
- Nearly 6 in 10 U.S. corporate executives said it was “somewhat” (50%) or “very” (9%) difficult for their company to please customers (Lithium)
- 77% of corporate execs agreed to some extent that the internet and consumer app companies were setting a new benchmark for customer experiences (Lithium)
- 93% of business leaders worldwide said technology had changed customer expectations in the past five to 10 years (EMC)
- 97% of U.S. corporate executives say customers want an efficient—that is, fast, cost-effective and personalized—level of experience (Lithium)
- 65% of corporate execs said rising customer expectations had increased pressure to innovate, and 58% said the same about competition with other companies (Lithium)
- 30% of corporate executives struggled with customer turnover or slowed revenue growth, and a similar percentage had increased discounts given (Lithium)
- 55% of millennials were willing to stick with a brand (Lim College)
- What brands can do to remain millennials’ brand of choice: develop innovative new products and services (80%), improve design/style to reflect uniqueness (74%), improve product quality (67%), engage in causes, philanthropy, or endeavors that reflect beliefs/values (63%) & limit distribution to maintain the brand’s exclusivity (54%) (Lim College)
- 66% of millennials may have abandoned what had been their brand of choice in 2013 because the brand no longer fit their identity, 66% had a simple desire to switch brands, 64% due to the availability of desirable new alternatives and 64% because the brand was no longer unique (Lim College)
- Millennials are not loyal to fashion brands. 45% of those surveyed say nothing can be done to retain them (Lim College)
- 65% of all consumers say they feel good about themselves and the company they are doing business with when they resolve a problem without talking to customer service (Aspect Software)
- 69% of Millennials say they feel good about themselves and the company they are doing business with when they resolve a problem without talking to customer service (Aspect Software)
- 56% of Millennials have switched brands in the past year because of poor customer service (Aspect Software)
- Frequency of interaction builds loyalty and advocacy: 87% daily, 64% weekly, 49% monthly and 33% few times/year (Strativity)
- 30% of less frequent customers wouldn’t miss a company or brand if they were gone or would leave for a better offer (Strativity)
- Only 43% of customers who brought a disappointment to the attention of the company indicated that amends were made (Strativity)
- 80% of customers who shared their disappointment with a company on social media indicated that amends were made (Strativity)
- Leading business concerns among US small business owners: finding new customers (66%) & retaining existing customers (40%) (Constant Contact)
- Primary driver of repeat business according to US small business owners: established relationships with customer base (57%) & loyalty programs (10%) (Braun Research)
- For every customer experience failure, brands lose an average of 65% of the revenue they would have earned from the affected customer during the following year (SDL)
- Once a customer experiences what they consider a major customer experience failure, 64% will stop recommending the organization, start looking for an alternative brand or actively disparage the company via word of mouth, social media or other online channels (SDL)
- 90% of those experiencing a customer failure spend the same or less with the brand during the following year. The 10% who spend more say they have no choice, being locked into a contract or have no other alternative (SDL)
- While 30% of consumers say showing them how the business has improved as a result of their failure will bring them back to the brand, this only works for 8% (SDL)
- 27% of young millennials will not try to resolve a customer experience failure, as compared to 13% of baby boomers (SDL)
- More than 40% of consumers’ worst customer experiences have occurred in digital industries, including communications, electronics and online retail (SDL)
- Consumers are more likely to remember a negative experience than a positive one: of those consumers that can recall a major negative customer experience that occurred in the past 10 years, only 55% can recall a major positive customer experience occurring in the same timeframe (SDL)
- Engaged consumers buy 90% more frequently, spend 60% more per transaction and are five times more likely to indicate it is the only brand they would purchase in the future. All of these factors lead to engaged customers delivering three times the value to the brand over the course of a year (Rosetta)
- When we compare highly engaged athletic clothing customers to non-highly engaged customers, we see that highly engaged consumers spend 97% more on average ($112 vs. $57) and purchase 94% more frequently (4.76 times a year vs. 2.45) (Rosetta)
- Engaged customers are four times more likely to say they “appreciate when this brand reaches out to me” and seven times more likely to “always respond to this brand’s promotional offers.” (Rosetta)
- Engaged customers are six times more likely to say they would “try a new product or service from the brand as soon as it becomes available.” (Rosetta)
- Millennials are 44% more likely to permanently disengage with brands if they receive high volumes of mass generic email communications (Aimia Institute)
- 66% of global respondents are willing to pay more for products and services from companies dedicated to social and environmental change (Nielsen)
- 73% of Millennials are willing to pay extra for products and services from companies dedicated to social and environmental change (Nielsen)
- 51% of Boomers are willing to pay extra for products and services from companies dedicated to social and environmental change (Nielsen)
- 72% of Gen Z are willing to pay extra for products and services from companies dedicated to social and environmental change (Nielsen)
- More than 50% of millennials indicated they trusted Amazon more than any other major tech company (Marketing Executives Networking Group)
- About 17% of millennials named Google as their most trusted tech brand, followed by Apple (12%), Facebook (8%), and Microsoft (5%) (Marketing Executives Networking Group)
- 55% of millennials claim to be more brand loyal today, compared to 39% of consumers in the 35-and-older group (Marketing Executives Networking Group)
Thanks for reading. I would love to hear your thoughts on customer retention and how important it is for your business. Also, if you have some great strategies to retain your customers, please share.
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